Brazilian stocks EWZ plummeted 23%, causing longs to suffer millions in liquidations, with bottom-fishing funds beginning to re-enter the market.

BlockBeats news, October 26 - According to TradingBeats monitoring, as of press time, the Brazilian stock ETF contract EWZ deployed by Trade.xyz on Hyperliquid is temporarily reported at $34.276, down about 23.11% in 24 hours, with a trading volume of about $55.29 million. Among them, from 08:00 to 09:00, about 576,300 units were traded in a single hour, accounting for about 40.6% of the current 24-hour trading volume, and trading concentration has noticeably increased.

This round of decline coincided with the finalization of the Brazilian election results, and the market's previous betting direction began to reverse. At 08:08 Beijing time today, Brazil's Superior Electoral Court confirmed Lula's re-election. Previously, the market had bet on right-wing candidate Flávio Bolsonaro winning, expecting him to promote fiscal tightening, lower financing costs, and support a stronger real.

Reuters reported that as of last Friday, Brazilian stocks had risen nearly 7% from before the first round of voting, and the real had appreciated nearly 5% against the dollar. After Lula's re-election, this trading logic faces reassessment.

Alejo Czerwonko, Chief Investment Officer for Emerging Markets at UBS Global Wealth Management, believes that the market rally after the first round of voting may largely reverse, and a credible commitment to fiscal discipline and a path to debt stability still need to be seen.

On-chain positions first contracted and then somewhat recovered. EWZ open interest was $15.42 million in the morning, fell to $8.95 million at noon, and then rebounded to about $13.96 million, an increase of about 56% from the morning low, but still below the level during vote counting.

In trading, there have already been large long position liquidations and cases of profitable short positions being auto-deleveraged (ADL):

- Large long position liquidated: A long position established half an hour before vote counting, with a transaction value of about $1.6182 million, was fully liquidated at 08:05, realizing a trading loss of about $152,300 (0x615f).

- Profitable short position subject to ADL: Another account opened a cumulative short of 61,000 EWZ this morning, of which about 29,400 units, corresponding to $1.0560 million in short positions, were automatically reduced by the system, realizing a trading profit of about $173,400. The account currently still holds about $787,000 in short positions, with unrealized profit of about $175,500 (0x888e).

After Lula's election victory was confirmed, the two accounts respectively established short positions within 10 minutes to bet on the decline, currently holding a total of about $2.08 million, with average prices of $34.66 and $34.70 respectively (0x0242, 0xda37).

After prices had already fallen significantly, in the past half hour, another account opened a long position of approximately $995,800 at an average price of $34.66, with about 28,700 long contracts still held (0x8de4).

Funding rates also reversed as the direction of trading changed. The two settlement rounds at 07:00 and 08:00 were −0.1383% and −0.1581% per hour, respectively, with shorts paying longs; starting from 09:00, seven consecutive rounds turned positive. The rate settled at 15:00 was approximately +0.0128% per hour.